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Development and Application of Management Tools Within a High-Mix, Low-Volume Lean Aerospace Manufacturing Environment

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Development and Application of Management Tools Within a High-Mix, Low-Volume Lean Aerospace Manufacturing Environment Development and Application of Management Tools within a High-Mix, Low-Volume Lean Aerospace Manufacturing Environment By Kevin McKenney S.B. Mechanical Engineering, Massachusetts Institute of Technology (2000) Submitted to the Department of Mechanical Engineering and the Sloan School of Management in Partial Fulfillment of the Requirements for the Degrees of Master of Science in Mechanical Engineering and Master of Business Administration MASSACHUSETTS INST E OF TECHNOLOGY In Conjunction with the Leaders for Manufacturing Program at the J Massachusetts Institute of Technology June 2005 LIBRARIES @2005 Massachusetts Institute of Technology. All rights reserved. Signature of Author Department of Mechanical EngiiYeering Sloan School of Management May 6, 2005 Certified by DavidHardt, Thesis Supervisor Professor of Mechanical Engineering Certified by Stephen Graves, Thesis Supervisor Abraham Siegel Professor of Management Accepted by David CapodiJatpoxeciti Director of Mastof's Prowgram Slan School of Management Accepted by____ LallBRa rnt Mehancal um ttee BARKER Department of Mechanical Engineering 2 Development and Application of Management Tools within a High-Mix, Low-Volume Lean Aerospace Manufacturing Environment By Kevin McKenney Submitted to the Department of Mechanical Engineering and the Sloan School of Management on May 6, 2005 in partial fulfillment of the Requirements for the Degrees of Master of Science in Mechanical Engineering and Master of Business Administration Abstract The design and implementation of a lean production system is a complex task requiring an intimate understanding of the fundamental lean principles. Much of the published lean literature is written at a high level of abstraction and contains very basic examples. When lean tools are applied blindly to complex, highly constrained systems, lean implementation becomes challenging and often ineffective. This thesis develops a set of management tools that emphasize the fundamental lean principles and the importance of an overarching value stream level management perspective in an effort to drive appropriate system design decisions and management behavior in such an environment. This thesis proposes the design of a high-mix, low-volume (HMLV) lean production system for implementation at Hamilton Sundstrand, a global supplier of technologically advanced aerospace and industrial products. The system establishes a series of mixed model flow lines based upon the principles of cellular manufacturing. The flow lines operate in a true pull fashion with an optimally sized finished goods supermarket and a strategic, continuous review incoming material ordering policy. In addition, a capacity planning tool, a long term resource cross-training planning tool, and a series of leading metrics and management levers are developed in order to help steer management decisions. Thesis Supervisor: David Hardt Title: Professor of Mechanical Engineering Thesis Supervisor: Stephen Graves Title: Abraham J. Siegel Professor of Management Science & Engineering Systems 3 4 Acknowledgements I would first like to thank the Leaders for Manufacturing program for its support of this work. The LFM faculty and my classmates have, both intellectually and socially, made the past two years of my life incredibly enjoyable and fulfilling. I would like to give a special thanks to my thesis advisors: Stephen Graves and David Hardt for helping me to establish credibility and for mentoring me through many of the challenges I faced throughout my internship. In addition, I would like to thank Hamilton Sundstrand for sponsoring this work. In particular, I would like to acknowledge the following individuals for their contributions: John Boyd, Mark Wellard, and Eric Rohrbacher for their continued sponsorship of the LFM program. Jorge Laires for welcoming me into his organization, allowing me the opportunity to contribute, and emphasizing the importance of a functionally integrated leadership mentality. Joe Shiver for treating me as a peer and encouraging me to participate as a member of the management team. Tony Grasso and all of the assembly and test technicians for treating me like one of the guys and helping me to understand and appreciate their work. The rest of the MES team who taught me along the way: Lance Bartosz, Dave Bedson, Larry Brodsky, Bob Collins, Ricky Dunne, Tim Gaudet, Bob Gleason, Russ Hubley, Mike Kuhns, Skip Murray, and Armand Mercier. I would also like to give a special thanks to the Operations Transformation Team that I toiled with day in and day out. Michael Butt, William Schnepp, and Robert Jennett accepted me as part of their team and continually encouraged me to challenge the status quo and try out new ideas. Much of my success I credit to them. It's been fun. Finally, I would like to thank Kate for braving a long distance relationship while I fulfilled my internship obligation and gained invaluable career experience. We now begin the next chapter in our lives together. Hamilton Sundstrand """"" "" A United Technologies Company MANAGEMENT 5 6 Table of Contents Abstract ............................................................................................................................... 3 Acknow ledgem ents ......................................................................................................... 5 Table of Contents ........................................................................................................ 7 List of Figures ..................................................................................................................... 9 List of Tables.....................................................................................................................10 Chapter 1. Introduction........................................................................................... 11 1.1 H am ilton Sundstrand..................................................................................... 11 1.2 Setting: M ES Introduction .......................................................................... 14 1.3 Product Line: JFC/GTA A ssembly and Test............................................... 15 1.4 Approach ....................................................................................................... 16 1.5 Literature Review ........................................................................................... 17 1.6 O verview of Chapters and Appendices.......................................................... 19 Chapter 2. Challenges at H am ilton Sundstrand ..................................................... 20 2.1 Low -V olum e, High-M ix ............................................................................... 20 2.2 Slow Product Life Cycle ............................................................................... 20 2.3 Resource A llocation Constraints.................................................................... 21 2.4 Scheduling ..................................................................................................... 21 2.5 Part Shortages................................................................................................ 22 2.6 Poor Test Yields ........................................................................................... 23 2.7 Organizational Resistance in a Mature Aerospace Company ....................... 25 2.7.1 Strategic Design Lens........................................................................... 25 2.7.2 Political Lens......................................................................................... 26 2.7.3 Cultural Lens ......................................................................................... 29 Chapter 3. Manufacturing System Design and Analysis ................... 31 3.1 G oals and Metrics......................................................................................... 31 3.2 V alue Stream M apping......................................................................................31 3.3 Product 80/20 Analysis ................................................................................. 35 3.4 Product Fam ily M atrix ................................................................................. 36 3.5 Takt Time Calculations .................................................................................. 39 3.6 Actual W ork Contents ..................................................................... 40 3.7 Process Flow Redesign ................................................................................. 42 3.8 Capacity Planning and Resource A llocation................................................. 43 3.9 Cross-Training................................................................................................ 50 3.10 Flow Line Configuration............................................................................... 56 3.11 Continuous Im provem ent............................................................................. 58 Chapter 4. Incom ing M aterials Strategy ................................................................. 59 4.1 Inventory Review Frequency ........................................................................ 61 4.2 Econom ic Order Q uantity ............................................................................. 61 4.3 Reorder Point ............................................................................................... 62 4.4 Expected Inventory Level ............................................................................ 63 4.5 Service
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